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US government debt rises 59% in the second quarter, amid efforts to stop the Corona virus and its repercussions
Government and business debt rose in the second quarter as the United States dealt with the coronavirus pandemic, even as personal net worth rose and consumer credit fell at a record low.
A Federal Reserve report released Monday showed that the total balance sheet of US households rose to nearly $ 119 trillion in the April-June period, up 6.8% from the first quarter.
Gains in net worth were driven almost exclusively by the stock market.
Thanks in large part to the unprecedented fiscal and monetary stimulus, the S&P 500 gained 20% during the quarter. This in turn led to a $ 5.7 trillion increase in net worth, or 75% of the total increase. The real estate contributed $ 500 million.
With the increase in financial assets, the debt has gone nowhere, at least at the household level.
Indeed, consumer credit declined at a record pace after World War II of 6.6%, thanks in large part to a drop in credit card balances to $ 953.8 billion from $ 1.02 trillion. Student loan debt was unchanged at $ 1.68 trillion while auto loans rose to nearly $ 1.2 trillion.
This came as the federal government and companies continued to escalate debt. Altogether, the total nonfinancial domestic debt reached $ 59.3 trillion.
